Maui Electric seeks 5.4% rate increase

Maui Electric Co., which serves about 64,000 customers on Maui, Molokai and Lanai, applied yesterday for a 5.3 percent rate increase with the state Public Utilities Commission.

The proposed increase would boost monthly bills $7.78 to $179.47 for a typical residential household on the island of Maui. The rate hike would generate an additional $18.9 million in revenue. On Molokai, the increase would increase monthly bills $8.69 to $182.26, and on Lanai it would go up $7.63 to $175.02.

The majority of Maui County residents will see increases of 2 percent to 4.4 percent, MECO said.

MECO, which notified the PUC on Sept. 22 that it would be seeking an increase, would offer a tiered rate structure under the proposal whereby those who conserve electricity would receive smaller increases.

"We understand that any increase is difficult for our customers," MECO President Ed Reinhardt said. "However, it is our job to not only meet the growing demand for electricity, but to also ensure that the service we provide is reliable."

Reinhardt attributed the increase largely to the addition of two units in recent years at the Maalaea Generating Station. The increase also would cover other investments in the MECO electric system to replace and upgrade aging equipment, the company said.

MECO last applied for a rate increase in January 1998, when it asked for an 11.9 percent increase, worth $16.4 million in annual revenue.

An interim rate increase of 8.5 percent, worth $11.7 million, was granted in December 1998 but lowered to 8.2 percent, or $11.3 million, in April 1999 when the PUC issued its final order. MECO awarded its customers refund credits, including interest, for the difference in the interim and final rates during that four-month period.

The PUC is expected to hold a public hearing on the proposed increase this spring and an evidentiary hearing at the end of this year or early 2008. The PUC may grant an interim increase within 10 to 11 months following MECO's application, the company said.

The rate increase request by MECO follows a 7 percent rate increase sought by Hawaiian Electric Co. in December and a 9.2 percent rate increase requested by Hawaii Electric Light Co. in May.

MECO and HELCO are subsidiaries of HECO, which is in turn a subsidiary of HEI Industries Inc.